Where Should The Extra Cash Go?
Jenny owns some rental property and she wants to know if she should use that to pay for the kids college, or save straight up for college.
QUESTION: Jenny will be finished with her total money makeover soon. Their kids are ages 12 and 9. Should they start saving for college or paying off their 6 rental properties, which are interest-only and were meant to provide for the kids college?
ANSWER: It sounds like you’re just hanging on right now, and when the market firms up I hope you’ll sell a couple of these. As far as the college versus paying extra on the rental property, I’d save for the kids’ college. You have so debt on the rental real estate that you won’t clear it before they go to school. As they start selling, you may change that program a little bit later. If the debt could be knocked off a little by the time they go to school by you selling a few, that might work. But in the meantime, between now and when you start selling them off, save for college.